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AFRReserved on 24.3.2021Delivered on 08.4.2021

Court No. - 34

Case :- WRIT - C No. - 11738 of 2020

Petitioner :- All U.P Stamp Vendors AssociationRespondent :- Union Of India And 3 OthersCounsel for Petitioner :- Vishesh Rajvanshi,Rajkishore SinghCounsel for Respondent :- C.S.C.,Kshitij Shailendra,Sumit Kakkar

Hon'ble Yashwant Varma,J.

The Court has heard Sri N.C. Rajvanshi, learned senior counsel

ably assisted by Sri Vishesh Rajvanshi for the petitioner and Sri Kshitij

Shailendra alongwith Sri Sumeet Kakkar learned counsels who have

appeared for the fourth respondent. Although the State was duly served

and on notice, none has appeared or addressed submissions on its behalf.

The papers of this writ petition have come to be placed before this

Court in light of the difference of opinion expressed by the Hon’ble

members constituting the Division Bench of the Court in accordance with

the provisions made in Chapter VIII Rule 3 of the Rules of the Court.

While Kesarwani J. upon an examination of the contentions addressed

held that the writ petition would merit dismissal, Bhanot J. has held that

in light of the issues which arise, the respondents must be required to file

their counter affidavits in the matter to enable the Court to deal with the

questions raised in greater detail.

The petitioner is an association of stamp vendors engaged in the

occupation of distribution and sale of judicial and non-judicial stamp

paper in its physical form. They question the terms of a proposed

agreement drawn by the Stock Holding Corporation of India, 1 the

Central Record Keeping Agency 2 appointed as such under the

Uttar Pradesh E-Stamping Rules, 2013 3. The constituents of the

1 SHCIL2 CRA32013 Rules

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petitioner association are licensed vendors appointed in terms of Rule 151

of the Uttar Pradesh Stamp Rules, 1942 4 framed in exercise of the

powers conferred on the State Government by Sections 74 and 75 of the

Indian Stamp Act, 1899 5.

In order to delineate the nature of the challenge which was raised in

the writ petition, it would be appropriate to reproduce the reliefs sought

therein: -

“1. Issue a Writ order or direction in the nature of certiorariquashing the agreement issued by the Respondent No. 4 for theappointment of Authorised collection centres which has beenmarked as Annexure No. 4 to this Writ Petition.

2. Issue a Writ, order or direction in the nature of Mandamusdirecting the Respondent No. 4 to reconsider the agreement underchallenge and to disclose the commission earned by theRespondent No. 4 by the State Government.

3. Issue a Writ, order or direction in the nature of Certiorariquashing the impugned Circular Dated 17.01.2020 marked asAnnexure No. 5 to this Writ Petition.

4. Issue a Writ, order or direction in the nature of Mandamusdirecting the Respondents Nos. 2 and 3 not to discontinue theprinting of physical judicial and non judicial stamps.

5. Issue a Writ, order or direction in the nature of Certiorariquashing the impugned letter/order Dated 25.02.2020 issued by theRespondent No. 3, which has been marked as Annexure No. 7 tothis Writ Petition.

6. Issue a Writ, order or direction in the nature of Mandamusdirecting the Respondents Nos. 2 and 3 to reconsider the claim ofthe Petitioner as per Annexure No. 6 to this Writ Petition.

7. Issue a Writ, order or direction in the nature of Mandamuswhereby directing the Respondents Nos. 2 and 3 to fix thecommission of the Petitioner's members as per Rule 161 of theRules, 1942.”

Since the provisions of the Act, the 1942 and the 2013 Rules have

been exhaustively noticed and set forth in the two opinions rendered, this

Court deems it unnecessary to extract the contents of those provisions

except to briefly notice them in order to appreciate the challenge that is

raised.

41942 Rules5Act

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A. THE STATUTORY REGIME UNDER THE 1942

RULES

Under the 1942 Rules, Rule 151 envisages two classes of vendors

who are authorised to deal in the distribution and sale of stamps. While

the first category comprises of those who are recognised as licensed

vendors ex officio, the members of the petitioner have been appointed by

the Collector as licensed stamp vendors in terms of the power granted by

clause (x) of Rule 151. Rule 151-B provides for the tenure of a license

that may be granted to licensed vendors. Rule 152 provides that no

licensed vendor would be entitled to sell court fee or non-judicial stamp

paper exceeding the aggregate value of Rs. 15,000 for one instrument to

any individual member of the public. In terms of Rule 157, licensed

vendors are empowered to purchase stamps from ex officio vendors on

payment of “ready money” less the discount that may be prescribed. Rule

161 provides that a licensed vendor would be entitled to receive a

discount of Rs. 1 per cent of the face value of the stamp that may be

purchased.

B. E- STAMPING AND THE 2013 RULES

E stamping was a system that evolved and was created post the

“Telgi Stamp Scam” which the country witnessed and led to the Union

Government formulating a “Computerised Stamp Duty Administration

System” [C-SDAS] which essentially envisaged the stamp duty payment

system progressing and transforming into one which would essentially

run on an electronic and computerised software platform thus minimizing

the chances of forgery and fabrication of physical stamp paper. For the

purposes of designing and implementing C-SDAS, SHCIL was chosen as

the CRA. The events surrounding the advent and introduction of the e

stamping system is duly noticed in the communication of the Union

Government dated 28 December 2005 which is reproduced hereinbelow: -

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New Delhi, the 28th December, 2005

“To,

The Finance/Revenue Secretaries,

All State/UTs Government.

Subject:- Authorisation of Stock Holding Corporation of India Ltd.to act CRA for the proposed computerization of Stamps DutyAdministration System – regarding.

Sir,

In pursuance to the announcement made in the Parliamentin the wake of Stamp paper scam, the Government of IndiaMinistry of Finance, Department of Economic Affairs appointedIndustrial Finance Corporation of India Ltd. (IFCI) as Consultantto suggest alternative methods of collection of Stamp Duty. Thepurpose was to devise mechanism of electronic method of Stampduty collection in order to-

i. Prevent the paper and process related fraudulent practices;

ii. Setting up a Secured and Reliable Stamp Duty Collectionmechanism;

iii. Storage of information in secured electronic form andbuilding up of a Central Data Repository to facilitate easyverification and generation of MIS reports.

2. The IFCI invited technical and commercial bids to identifythe suitable agency to function as Central Record Keeping Agency(CRA) for computerization of Stamp Duty Administration System(hereinafter called the 'C-SDAS') in select cities on pilot basis onBuild – Operate – Transfer (BOT) structure, initially for a periodof five years. After due bidding process, M/s Stock HoldingCorporation of India Ltd. (SHCIL) has been selected and are beingauthorized to act as Central Record Keeping Agency (CRA) for theabove mentioned purposes with immediate effect.

3. SHCIL will broadly provide the following services to therespective State Governments, desirous to participate in theprocess in view of the fact that Stamp Duty is a State subject:

i. Creating need based infrastructure, hardware and softwarein the designated places in consultation with the StateGovernments and its connectivity with its main server;

ii. Creating need based hardware and software in the officesof sub-Registrar(s) and at authorized collection centers (the pointof contact for payment of Stamp Duty) within the identifiedcities/places;

iii. Training the identified manpower/personnel in the sub-Registrar offices;

iv. Role of facilitation in selection of authorized collectioncentres for Stamp Duty;

v. Role of coordinator between the Central Server of

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authorized collection centre (banks, etc.) and the sub-Registraroffices.

4. For the above services, the State Governments would berequired to make payment to CRA 0.65% of the value of StampDuty collected through this mechanism, as per its financial quotein the competitive bid. After a period of 5 years, SHCIL will handover the operations to the respective State Governments or theState Governments may retain their services for a further periodbased on a mutual agreement.

The issues with the approval of competent authority.”

In order to give effect to the aforesaid policy initiative, the State

Government framed the 2013 Rules. The State Government which is

defined to be the appointing authority under these Rules is empowered to

select and appoint a CRA which meets the qualifying criteria prescribed

in Rule 3. The 2013 Rules define “approved intermediaries” to mean the

CRA and the Authorised Collection Centers 6. An ACC is defined to

mean an agent appointed by the CRA with the prior approval of the

Government, to act as an intermediary between the CRA and the person

who pays stamp duty for the purposes of collection of tax under the Act.

Rule 10 prescribes that the CRA would be entitled to an agreed

percentage of commission on the amount of stamp duty collected by

ACC’s. The rate of commission is required to be published in the Gazette.

Rule 12 provides that the CRA would be liable to pay such service

charges or commission to ACC’s as may be mutually agreed between

them at its own level. In essence the liability toward commission payable

to ACC’s is to be borne by SHCIL and no part of that liability is to be

passed onto the Government.

Prior to the First Amendment to the 2013 Rules, licensed vendors

such as the constituents of the petitioner association were ineligible to be

appointed as ACC’s. However, post promulgation of the 2019

amendments, undisputedly they are now entitled to be considered for

appointment as ACC’s in terms of Rule 13 as it stands now. All that is

required is that they be licensed vendors under the 1942 Rules and hold

the qualifications that may be prescribed by the Stamp Commissioner.

6 ACC

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C. CONTENTIONS ON BEHALF OF THE

PETITIONER

The petitioner before the Division Bench assailed the proposed

agreement principally on the ground of the State action violating the

constitutional protections guaranteed by Articles 19(1)(g), 21 and 38 of

the Constitution. It was contended that the terms of the agreement as

structured were bound to place licensed stamp vendors in a

disadvantageous position and necessarily result in them suffering a loss. It

was submitted that the commission which was guaranteed to them under

the 1942 Rules should also govern the trade and distribution of e stamps.

The petitioners invoked Articles 21 and 38 of the Constitution and the

right to livelihood as flowing from the aforesaid Articles to seek a

direction for the continuance of the system of physical stamping. They

further sought to assail the agreement proposed by SHCIL by seeking a

direction for the State respondents disclosing the actual commission

earned by the CRA from the sale of e stamps in the State.

D. SUBMISSIONS OF THE STATE

Controverting the aforesaid submissions, it was urged on behalf of

the State that licensed vendors have no fundamental right to trade or carry

on the business of physical stamps since the conditions of their

engagement is circumscribed by the terms of the license that is granted to

them. It was contended that a stock of physical stamp paper valued at Rs.

17,000 crores still existed in the State and therefore the apprehension that

licensed vendors would be deprived of a right of livelihood was clearly

misplaced. The State also urged that post the amendments to the 2013

Rules, licensed vendors had also became eligible to be appointed as

ACC’s and therefore it could not be said that their rights as conferred by

Article 19 of the Constitution had been violated. Insofar as the issue of

commission is concerned, it was urged that no cogent material had been

brought on record which may have even prima facie established that the

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business of an ACC would necessarily be loss making. It was further

submitted that the provisions made under the 1942 Rules for payment of

commission could have no application to the sale of e stamps since that

subject would be governed exclusively by the provisions made in the

2013 Rules.

E. OPINION RENDERED BY KESARWANI J.

Dealing with the right of licensed vendors to deal in e stamps

Kesarwani J. in his opinion held: -

“20. There is no averment in the writ petition that members of thepetitioner's Association have applied for appointment as "AuthoriseCollection Centre" under the E - Stamp Rules, 2013. The allegationof bank charges and expenses are also not supported by anyevidence. It has been well settled by Hon'ble Supreme Court inBharat Singh Vs. State of Haryana (1988) 4 SCC 534 (Para 13) that"If the facts are not pleaded or the evidence in support of such factsis not annexed to the writ petition or to the counter-affidavit, as thecase may be, the Court will not entertain the point." The petitionersare still not Authorised Collection Centre. They have no right todictate the terms of contract. It is wholly within their choice toapply for appointment as "Authorised Collection Centre" and enterinto contract under Rule 12 to act as an intermediary between theCentral Record Keeping Agency and the Stamp duty payer forcollection of stamp duty, if they find it beneficial to them. Theyhave no fundamental or legal right to trade in E-Stamp or to act anintermediary for collection of stamp duty which is a tax and iswithin the exclusive domain of the Government.”

His Lordship went on to observe: -

“Besides above, as per clause (vii) of the proposed agreement, the"Authorised Collection Centre" shall be entitled to 23% of thecommission earned by the respondent No.4 from the State of U.P.for such e-stamps generated by the ACC in Uttar Pradesh which isneither unreasonable looking into the duties of the respondent No.4specified under the aforequoted Rule 9 nor it could bedemonstrated by the petitioners to be unreasonable.”

Dealing with the challenge to the communication of 17

January 2020, his Lordship held:-

“22. So far as the relief No.3 is concerned, we find that it is acorrespondence between the Additional Chief Secretary, Board ofRevenue, Uttar Pradesh, Prayagraj and Chief Treasury Officer,Kanpur Nagar, regarding stamps printing. There is no factualfoundation in the writ petition that any licenced stamp vendorunder the U.P. Rules 1942 has been denied sale of physical stamp

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under their licence. Learned counsel for the petitioners has also notdisputed the submissions of learned Additional Chief StandingCounsel that the State Government has very huge stock of stampsin physical form. Under the circumstances, the challenge to theimpugned letter of the Additional Chief Secretary, dated17.01.2020 is wholly misconceived. Therefore, the relief No.3sought for its quashing has no merit and is, rejected.”

Dealing with the prayer of the petitioners for a direction being

issued commanding the respondents not to discontinue physical stamps,

Kesarwani J. held: -

“24. The relief so sought by the petitioners is wholly misconceivedin as much as, firstly , no material has been placed or pleaded in thewrit petition which may indicate that despite demand the physicalstamp has not been issued to any licenced vendor under the U.P.Rules 1942 and, secondly , the aforementioned notification of theCentral Government dated 28.12.2005 indicates that E-Stamp saleis a policy decision of the Government for collection of stamp dutywhich has been taken pursuant to the announcement made in theParliament in the wake of stamp paper scam. Now e-stamp isgoverned by the E-Stamp Rules 2013. The petitioners beinglicenced stamp vendors under the U.P. Rules 1942 have the rightfor enforcement of conditions of their licence. They can not dictatethe Government for collection of stamp duty under Section 10 ofthe Act, in the manner as per their (petitioners) desire.”

His Lordship went on to hold: -

“…….Thus, stamp duty being a tax and sale of physical stamp orE-stamp for collection of revenue being policy decision of theGovernment in fiscal matter, no mandamus under Article 226 ofthe Constitution of India can be issued to the Government at theinstance of the petitioner to print physical stamp when theGovernment has taken a policy decision backed by statutoryprovision for E-stamp and to permit "ACC" to issue e-stamp of anyamount to a person under the E-Stamp Rules.

27. The petitioners have not disputed that the E-StampRules 2013 has been validly framed. The decision of theGovernment for sale of E-Stamp and the legislation made in thisregard relates to economic matter/activities which should beviewed with greater latitude than laws touching civil rights such asfreedom of speech, religion etc. While dealing with economiclimitation, Hon'ble Supreme Court in the case of R.K. Garg Vs.Union of Inida 1981 (4) SCC 675 (para 8) observed thatthe court must always remember that legislation is directed topractical problems, that the economic mechanism is highlysensitive and complex, every legislation particularly in economicmatters is essentially empiric and it is based on experimentation.There, may be crudities and inequities in complicated experimentaleconomic legislation but on that account alone it cannot be struckdown as invalid.”

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Dealing with the challenge to the rate of commission as prescribed

under the proposed contract, Kesarwani J. observed: -

“31. Rule 12 of the E-Stamp Rules 2013 provides that the CentralRecord Keeping Agency may appoint agent(s) called"Authorised Collection Centre" to act as anintermediary between the Central Record - Keeping Agency andthe Stamp duty payer for collection of Stamp duty. Thus, ifmembers of the petitioners apply for and are appointed as"Authorised Collection Centre" by the respondent No.4, then theirstatus shall be of an agent of the respondent No.4. As per theaforesaid Rule 12 the Service Charges, Commission or feeetc. payable to the "Authorized Collection Centre" shallbe paid by the Central Record - Keeping Agency i.e. therespondent No.4 at their own level as mutually agreed betweenthem. Thus it is wholly within the choice of licenced stampvendors either to agree to work as agent of respondent No. 4 on thecommission/service charge/fee as may be offered to them by therespondent no.4 or not to agree. By no stretch of imagination itinfringe Article 19(1) (g) or Article 21 or Article 38 of theConstitution of India. The entire submissions of learned counsel forthe petitioners in this regard is totally baseless and withoutsubstance. This Court under Article 226 of the Constitution ofIndia cannot direct the respondent no.4 to agree to pay to ACCcommission/service charge/fee as may be demanded by thepetitioners in contrast to the mutually agreed amount under Rule 12of the E-stamp Rules and enter into contract on that basis with alicensed stamp vendor for his appointment as agent (A.C.C.).”

The constitutional challenge was negatived with his Lordship

holding: -

32. Article 19(1)(g) of the Constitution accords fundamental rightto carry on any profession, occupation, trade or business which issubject to imposition of reasonable restriction in general publicinterest by the State under Article 19(6). The petitioners have nofundamental right to sell E-Stamp or for appointment as an agentunder Rule 12 of the E-Stamp Rules. Amount ofcommission/service charge/fee as may be or has been offered bythe respondent no.4 to persons for appointment as agent under Rule12, does not infringe Article 19(1)(g).

33. Article 21 of the Constitution provides that no person shall bedeprived of his life or personal liberty except according toprocedure established by law. Apprehension of lower income thanthe desired income as an agent under Rule 12 does not attractArticle 21 of the Constitution.

34. Article 38 is the directive principle of State Policy. Learnedcounsel for the petitioner has completely failed to demonstrate asto how Article 38 is attracted and is enforceable under the facts andcircumstances of the present case. Therefore, his submission withregard to Article 38 is also rejected.

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On recording of the aforesaid conclusions, His Lordship proceeded

to hold that the writ petition was liable to be dismissed.

F. OPINION PRONOUNCED BY BHANOT J.

Dealing with the validity of the terms of the agreement, Bhanot J.

on the other hand observed: -

“15. The commission received by the Central Record-keepingAgency/SHCIL, from the State of Uttar Pradesh is not revealed inthe said proforma agreement, nor has it been otherwise disclosed tothe petitioner either by the State Government or by the SHCIL.Consequently the amount of commission to which the AuthorizedCollection Centre is entitled under the proposed contract withSHCIL cannot be determined. This makes the proposed agreementbetween the Authorized Collection Centre and the Central Record-keeping Agency / SHCIL vague and uncertain.”

His Lordship then went on to observe: -

“16. …..Accordingly, the commission to which the AuthorizedCollection Centre will be entitled upon the sale of e-stamps worthRs. 1 lakh is Rs. 115/-. The Authorized Collection Centre isrequired to predeposit an amount of Rs. 1 lakh in its bank accountas advance, for purchase of e-stamps from the SHCIL / CentralRecord-keeping Agency of equivalent value. Upon deposit of saidamount, a sum of Rs. 250/- is charged by the bank as cash handlingcharge. Hence the Authorized Collection Centre is sure to suffer acertain financial loss on each transaction of purchase and sale ofstamps.

17. The proposed agreement thus creates an assurance of certainlosses for the Authorized Collection Centre. Ordinary prudencewould have it that no private entity will enter into a contract whereloss is certain. (These consequences are being drawn on a plainreading of the writ petition, and without the benefit of pleadingsfrom the respondents by counter affidavits).”

Evaluating the question of whether SHCIL could be recognised to

be discharging a public function and that contracts so entered must be in

accord with principles recognised by public law, Bhanot J. held:-

“25. The cumulative effect of the aforesaid facts is that the CentralRecord-keeping Agency and Authorized Collection Centre,discharge public functions. Consequently their actions includingthe proposed agreement can be judicially reviewed, and the sameare accountable to public law.

26. It is well settled that the court cannot rewrite the contractbetween the parties. Moreso, in this case it is not the ken of thecourt to determine the commission to be paid to either party.

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However, it is very much concern of the court to enquire whetherthe proposed agreement between the Central Record-keepingAgency/SHCIL and the Authorized Collection Centre is consistentwith the law of the land or not.”

His Lordship then proceeded to notice the body of precedent as has

evolved with the Supreme Court expanding the applicability of the

principles of unconscionable terms of contracts and unequal bargaining

powers of parties to a contract infused with a public element. After

noticing various precedents rendered on those subjects, his Lordship

observed: -

“28. There are other limitations on the creation of contracts underthe public law. Some salient aspects of the proposed agreementbetween the Central Record-keeping Agency /SHCIL, and theAuthorized Collection Centre will now be considered. Theproposed agreement is not a simplicitor commercial contract.Public functions will be discharged by the parties in the frameworkof the said contract. There is a dominant public law element in theaforesaid contract. The parties to the contract also perform statutoryfunctions under the Rules of 2013. The said agreement fulfills astatutory purpose. A contract between the Authorized CollectionCentre, and the Central Record-keeping Agency is critical to theexistence of the Authorized Collection Centre, and for its efficientfunctioning to implement the scheme of the Act and the Rules of2013. The proposed agreement has to be compliant with therequirements of public law.

37. From the pleadings it transpires that the exact commissionpayable to the SHCIL/Central Record-keeping Agency from theState Government is not known, and remains shrouded in opacity.Consequently, the exact commission to which the AuthorizedCollection Centre is entitled, cannot be determined. Businessdecisions cannot be taken in absence of material facts, which are inthe knowledge of one of the parties but not disclosed to the othercontracting party.

38. These features of the proposed agreement run counter to therequirement of fairness and transparency in contracts coming in theambit of public law. Vague terms and uncertainty in the contractcan exist on the pain of invalidation under Section 29 of the IndianContract Act.

39. As seen earlier, this is not a business /commercial contractsimplicitor. Hence the concept of unequal bargaining power couldwell apply to the facts of the case. The SHCIL is apparentlyexerting its superior bargaining power over the AuthorizedCollection Centre, to induce the latter into an unequal contract. Theoffending part of the proposed agreement appears to be opposed topublic policy, and seems unconscionable. But the issue can bedecided with finality only after exchange of pleadings.”

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Dealing with the applicability of Article 19(1)(g), his Lordship

held: -

45. The right to trade in e-stamps comes within the embrace ofArticle 19(1)(g) of the Constitution of India. This, however, doesnot mean that any person has a fundamental right to be appointedas an Authorized Collection Centre. The appointment ofAuthorized Collection Centre is strictly governed and regulated bythe Rules of 2013, and has to be made according to the said Rules.

46. Thus subject to the restrictions imposed by the law, (in thiscase the Indian Stamp Act, 1899, read with Uttar Pradesh E-Stamping Rules, 2013), the members of the petitioner have afundamental right to trade in e-stamps. According to the petitioner,the offending condition in the proposed contract and actions of therespondents, curtail the fundamental right of the petitioner incontravention of the permissible restrictions under Article 19(6) ofthe Constitution of India, and violate Article 19(1)(g) of theConstitution of India.

Bhanot J. ultimately proceeded to frame the following operative

directions: -

“54. The respondents are granted four weeks time to file theirrespective counter affidavits'. While filing the counter affidavit, therespondent no. 4-SHCIL shall also state its organizational detailsand structure, constitution of its Board, the extent of control of theGovernment both administrative and financial, and any other likeinformation.

55. The SHCIL and the State Government are directed to make thenecessary disclosures regarding the actual commission being givento the Stock Holding Corporation of India Limited by the StateGovernment, and reveal the same to the petitioner within twoweeks from the date of receipt of a certified copy of this order.”

G. SUBMISSIONS BEFORE THIS COURT

Before this Court Sri Rajvanshi learned senior counsel has

advanced submissions on lines identical to that as urged before the

Division Bench. Additionally, he contended that after opinion had been

rendered by the Division Bench, the position has worsened with physical

stamp paper not being available for purchase by licensed vendors at all.

As noted in the very beginning, the State went unrepresented before this

Court with designated counsel choosing not to appear or advance

submissions.

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Sri Kshitij Shailendra and Sri Sumeet Kacker appeared on behalf of

SHCIL. Adopting the objections taken on behalf of the State respondents

before the Division Bench, the attention of the Court was additionally

drawn to the decision rendered by the Division Bench of the Gujarat High

Court in Manish Jitendrakumar Shah Vs. State of Gujarat 7 to

contend that the ban imposed on the sale and distribution of physical non

judicial stamp paper by the Government of Gujarat was upheld for

reasons recorded therein. Learned counsels further urged that in the

absence of any challenge to the policy of e stamping or the 2013 Rules,

no relief could be accorded to the petitioner. It was contended that the

policy initiative of e stamping as adopted by numerous States across the

country did not merit any interference. Stress was also laid on Rule 12 of

the 2013 Rules on the basis whereof it was contended that the proposed

agreement was in accord with the provisions made therein. It was further

stated that the rate of commission is to be mutually agreed upon by

parties after entering into the contract and that the proposed contract also

puts in place a dispute resolution mechanism which could always be

invoked. The attention of the Court was also invited to Clause VII of the

proposed agreement which stipulates an ACC being paid 23% of the

commission earned by SHCIL from the State and that any change thereto

could be made with mutual consent. It was in that backdrop submitted

that the remuneration payable to an ACC would never remain static and it

was also not sacrosanct. It would be a subject which would always remain

open for resolution between parties.

H.THE PRINCIPAL ISSUE

Having noticed the two opinions rendered by the learned members

comprising the Division Bench and the submissions advanced, the

principal issue which essentially arises for consideration is whether the

petitioners have been able to establish a prima facie case against the

action taken by the respondents which warranted them being required to

7 Special Civil Application No. 16221 of 2019 decided on 24 July 2020

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file a return in these proceedings. Before proceeding to deal with the

aforesaid issue, it would be apposite to enunciate two fundamental

pedestals in the backdrop of which the challenge would be liable to be

evaluated.

Firstly, while approaching the issue as formulated above, the Court

must necessarily bear in mind that the proceedings instituted by the

petitioners are for a certification of claims which are personal to the

Association and its members. It is pertinent to underline and highlight

here at the outset that the petition has not been brought in public interest.

This is evident from the fact that the petitioners assert that the action of

the State violates the guarantees held forth by Articles 19(1)(g), 21 and 38

of the Constitution. This aspect would assume significance when the

Court proceeds to deal with the question whether the respondents are

obliged to disclose the terms of the arrangement between SHCIL and the

State Government.

It thus becomes necessary and essential to articulate the clear

distinction which must be recognised to exist when the Court under

Article 226 of the Constitution exercises its powers of judicial review in

respect of an action which is personal as opposed and distinct from a

petition preferred in larger public interest and not really for individual

relief being accorded. The principal distinction is while an individual

action is adversarial, a petition preferred in public interest is not. While it

may be permissible for the Court while dealing with a public interest

litigation to assume an “inquisitorial” role in order to hold the State liable

and obliged to give effect to the Constitution and the laws, as opposed to

the above, an individual petition must necessarily rest and proceed on

material gathered by the petitioner and the validity of the objection and

challenge as raised therein. On such a petition it is neither open for the

Court to undertake a roving enquiry in order to satisfy itself with regard

to the validity of the impugned action nor can the respondents therein be

required to produce material on the basis of interrogatories and directives

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in order to sustain or grant a relief that may have otherwise been sought.

Equally important it would be to bear in mind that the scope of the writ

petition also cannot be expanded beyond the grounds of challenge which

are raised and the reliefs sought in order to subserve some larger public

interest, a course which would otherwise be permissible in the case of a

public interest litigation.

The second aspect which needs to be clearly and unambiguously

spelt out arises from the following narration of facts. Undisputedly, the

system of e stamping, the appointment of a CRA, the appointment of an

ACC are subjects which are governed and controlled by the Uttar

Pradesh E- Stamping Rules, 2013 . The proposed contract as

published by SHCIL and assailed by the petitioners is also traceable to the

provisions made in the 2013 Rules. However, no challenge was either

raised or laid to the statutory rules as framed nor was it contended that the

proposed agreement is in violation of or ultra vires any provision made in

the 2013 Rules. The policy initiative of e stamping was also not

questioned.

Having enumerated the broad contours in the backdrop of which

the instant challenge would have to be examined and an opinion formed

on the question of whether the writ petition raises triable issues which

would warrant the respondents being required to respond, the Court now

proceeds to deal with the rival submissions which were addressed.

I. COMMISSION FIXED UNDER THE 1942 RULES TO

APPLY TO E STAMPS

It would be convenient to firstly deal with and dispose of a minor

submission which was addressed in challenge to the commission which is

proposed to be paid to the petitioners. Sri Rajvanshi, learned senior

counsel, submitted that in terms of the provisions made in the 1942 Rules,

the members of the petitioner Association are entitled to a commission of

Rupee 1 per cent of the face value of the stamp which is being purchased.

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He would contend that the same rate of commission would be liable to be

extended to the petitioners on the sale of e stamps also. While Bhanot J.

has not dealt with this issue, Kesarwani J. has rejected this contention by

opining that the discount as fixed under the 1942 Rules cannot be held to

apply to the sale of e stamps which is governed by the 2013 Rules and

puts in place “a different scheme exclusively governing sale of E stamps”.

While not much would depend or turn upon the difference between

a “commission” and a “discount”, it may nonetheless be clarified that

Rule 161 of the 1942 Rules in fact speaks of a “discount” being extended

to licensed vendors as opposed to what was described to be a

commission. The Rule enables licensed vendors to purchase stamp

essentially at a price lower that its face value and is thus really not a

commission as commonly understood, but clearly a discount and which

represents the margin that they can retain upon the sale of such stamps.

Reverting then to the merits of the argument aforenoted, in the

considered opinion of this Court, the view as expressed by Kesarwani J. is

clearly unexceptionable. Undisputedly the 1942 Rules principally govern

the sale of physical stamps. Rule 161 prescribes a discount when a

licensed vendor purchases stamp from the Government treasury. The

aforesaid Rule cannot be read as either expressly or impliedly governing

or controlling the sale of e stamps. As rightly found by Kesarwani J., sale

of e stamps is governed exclusively by the 2013 Rules which in one sense

is a complete and comprehensive code governing the sale, distribution

and use of e stamps. This Court thus finds itself unable to accept the

submission addressed contrary to the above.

J. THE ARTICLE 19(1)(g), 21 and 38 CHALLENGE

The challenge on the anvil of Article 19(1)(g) proceeds on the

following lines. According to the petitioners, the proposed contract and

the statutory obligations which are otherwise cast upon an ACC including

the creation of infrastructure for such a center, imposes an onerous

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financial burden upon them. Sri Rajvanshi learned senior counsel has

referred the Court to the averments made in paragraphs 17 to 20 of the

writ petition in order to demonstrate and establish that if the members of

the petitioner association were forced to enter into the proposed contract,

they would inevitably suffer losses and the trade and business of e stamps

itself would be rendered unprofitable. Article 19 (1)(g) is thus essentially

invoked on the ground of an apprehension of the trade becoming

unprofitable and losses bound to be caused if the petitioners were forced

to engage in the sale and distribution of e stamps in accordance with the

terms set forth in the proposed agreement. Additionally, it was contended

that if the system of physical stamps were to be done away altogether, it

would result not just in an infraction of Article 19(1)(g) but also Article

21 and 38 of the Constitution since it would result in a loss of livelihood.

In order to assess the validity of the aforesaid submissions, it would

firstly be apposite to bear in mind that the Indian Stamp Act, 1899, in

essence, empowers the Union and the States to impose a tax on

instruments that come to be executed. The tax is so imposed by virtue of

the legislative field as enumerated in Entry 91 of List I and Entry 63 of

List II as set out in the Seventh Schedule to the Constitution. The tax

imposed on instruments is traceable to the sovereign power of the State.

Neither the Act nor the U.P. Stamp Rules 1942 recognise or confer a right

on any individual to trade in or carry on the business of sale of stamps.

The petitioners cannot possibly assert or claim a right to engage in the

business or trade of stamps outside the contours of the Act and the Rules

of 1942 and 2013 as framed thereunder. The right to distribute and sell

stamps is granted by the Rules to a certain class of vendors and

authorities, ex officio and licensed, as specified in Rule 161 alone.

Undisputedly, the members of the petitioner Association are licensed

vendors appointed in terms of the provisions made in Rule 151(a)(x).

Their right to deal in stamps is founded exclusively on this license.

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It becomes pertinent to state that stamps, as envisaged, essentially

denote, evidence and exhibit the payment of tax as imposed by the

appropriate Government upon a party to an instrument. A right to engage

in the trade, business or occupation of collecting tax for and on behalf of

the Government was not one which was recognised even in common law.

It therefore needs to be understood that the petitioners do not and cannot

in law be recognised in law to possess an inalienable right to carry on the

trade or business of stamps except in accordance with the grant as

conferred under the Act and the Rules framed thereunder.

In Ram Krishnan Kakkanth Vs. Government of Kerala 8,

the Supreme Court dealing with a challenge raised by pump set

distributors to a Government stipulation that farmers who had been

extended financial assistance would purchase pumps only from accredited

dealers, aptly observed: -

“28. Under clause (1)(g) of Article 19, every citizen has a freedomand right to choose his own employment or take up any trade orcalling subject only to the limits as may be imposed by the State inthe interests of public welfare and the other grounds mentioned inclause (6) of Article 19. But it may be emphasised that theConstitution does not recognise franchise or rights to businesswhich are dependent on grants by the State or business affected bypublic interest (Saghir Ahmad v. State of U.P. [(1955) 1 SCR 707 :AIR 1954 SC 728] ).

32. It may be indicated that although a citizen has a fundamentalright to carry on a trade or business, he has no fundamental right toinsist upon the Government or any other individual for doingbusiness with him. Any Government or an individual has got aright to enter into contract with a particular person or to determinea person or persons with whom he or it will deal.”

In the considered opinion of the Court the dictum laid down in

Krishnan Kakkanth succinctly enunciates the nature and the extent of

the right that the petitioners can possibly assert with reference to Articles

19, 21 and 38 of the Constitution. As held in that decision, the petitioners

cannot claim an indefeasible right to the grant of a franchise in their

favour nor can they claim a license of exclusivity to deal in stamps. It is

within the limits of the licensing provisions alone that they can claim a

8(1997) 9 SCC 495

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right to an equal opportunity to apply, not to be treated unfairly or be

discriminated in the issuance of the grant and the freedom to pursue that

occupation and trade subject to valid statutory restrictions that may be

imposed and those which may otherwise be applied by law in larger

public interest. While it is true that Krishnan Kakkanth speaks of the

'freedom' of the Government to enter into a contract”, all that may be

observed in light of the law as it has developed on that issue, is that as

and when the Government does decide to enter into a contract or invite

persons to engage with it, its actions must be in accord with the principles

of fairness as flowing from Article 14 of the Constitution.

In fact, while dealing with the extent of the right that the petitioners

can claim by virtue of Article 19 of the Constitution, Bhanot J. also

notices and acknowledges the inherent limitations which would apply

when his Lordship observes: -

“46. Thus subject to the restrictions imposed by the law, (in thiscase the Indian Stamp Act, 1899, read with Uttar Pradesh E-Stamping Rules, 2013), the members of the petitioner have afundamental right to trade in e-stamps.”

Dealing with the validity of a restriction imposed by the State

which provided that stamp paper not exceeding the face value of Rs.

2000, would be made available to licensed stamp vendors, a Division

Bench of the Court in Stamp Vendors Association Vs. State of

U.P. 9 succinctly highlighted the aforesaid position in the following

terms:-

14. If one understands correctly the ratio laid downin Fedco v. S.N. Bilgramai, AIR 1960 SC 415, prevention of fraudstands comprised within the phraseology experssed in Article 19(6)of the Constitution.

15. Further as per Deputy Asst. Iron & Steel Controller v. ManikChand, (1972) 3 SCC 324 : AIR 1972 SC935; Farnandez v. Deputy Chief Controller, (1975) 1 SCC 716 :AIR 1975 SC 1208 and Nagendra v. Commissioner, AIR 1958 SC398 it is clear that the right to sell the stamps is created by grant ofa licence under the Indian Stamp Act and the Rules framed by ourState under that Act and thus the exercise of the right to sell the

9 AIR 2001 ALL. 49

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stamps is subject to the terms and conditions imposed by theStatute and no fundamental right is infringed by imposition ofterms and condition. In State of Orissa v. Radhey Shyam (1995) 1SCC 652 : (AIR 1995 SC 855) it was laid down that businessinterest of an individual can be overridden by the Governmentpolicy in the public interest.

16. In sale of the stamps public interest is apparently invovled.From the facts pleaded by the Petitioner it is clear that the limit ofRs. 5,000/- was enhanced to Rs. 8,000/- but now it has beenlowered. The amendment made is clearly permissible under Article19(6) of the Constitution being in the interest of ‘general public’imposing a reasonable restriction while permitting sale of Stampsworth to the extent of Rs. 2,000/- only to the Stamp Vendors underthe provisions of the Stamp Laws. The business secured underArticle 19(1)(g). Only a restriction has been imposed which is notarbitrary. We hold that the amendment was made in order to avoidfraudulent use and avoid misuse of stamp papers in the interest ofgeneral public as the income of the revenue of the State is publicrevenue which is being spent for the interest of the general public.We find the grounds devoid of any substance.”

In fact, if the submission addressed on behalf of the petitioners be

accepted in literal terms, it would essentially mean recognizing a right

vesting in them to compel the Government to necessarily engage in

business or enter into a contract with the petitioners for the sale of

physical stamps in posterity to the exclusion of all other modes. As a

necessary corollary, the Court would also have to recognise a right

inhering in the petitioners to compel parties to instruments to purchase

physical stamps. Neither of the above can be countenanced as a right

which can be legitimately traced to Articles 19(1)(g), 21 or 38.

While it was vehemently contended that the petitioners were bound

to suffer losses if they were compelled to enter into the proposed contract,

it becomes pertinent to note that the assertions made in paragraphs 17 to

21 of the writ petition are based entirely on assumptions and

presumptions. No material or evidence has been brought forth to establish

conclusively that the petitioners would in fact suffer losses. The

commission that is supposedly granted to SHCIL by the Government is

based on an assumption. It is similarly urged in paragraph 18 that the

petitioner “has been informed by the officials of the Respondent No. 4

that the commission earned by the Respondent No. 4 by the State

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Government is fixed 0.5% on the sale of E stamps worth Rs. 1,00,000.”

The writ petition carries no other material in support of the aforesaid

statement. The calculations of revenue that the petitioners would earn on

the sale of e stamps is based solely on the aforesaid unsubstantiated

averment. The petitioners have also not disclosed the total revenue that is

generated from the sale of e stamps in the State so as to compel the Court

to prima facie conclude that the proposed contract places onerous

conditions upon them. In paragraph 20 of the writ petition, the petitioners

raise the issue of a “cash handling charge” that is allegedly levied and

collected by Banks. Even in respect of this charge no authoritative

material has been brought on the record.

The more fundamental question which arises in the aforesaid

backdrop is whether Articles 19, 21 or 38 of the Constitution confer a

right as claimed by the petitioners to engage in a business, trade or

occupation which would necessarily guarantee or sustain a profit or a

reasonable rate of return. It is apposite to note here that what the

Constitution essentially guarantees is the right to engage in a profession,

occupation, trade or business. It neither proffers nor holds forth a

guarantee of a profit in that trade or business.

Way back in Malwa Bus Services (P) Ltd. Vs. State of

Punjab 10, the Supreme Court while dealing with the validity of a cap

imposed on returns that could be earned by bus operators on passenger

tickets, held: -

“22. It was lastly urged that the levy is almost confiscatory incharacter and the petitioners would have to close down theirbusiness as stage carriage operators. It is stated that the passengerfares were permitted to be raised by about 43 per cent just beforethe levy was increased in this case and it is even now open to theoperators to move the State Government to increase the rates ifthey feel that there is a case for doing so. But on the facts and inthe circumstances of the case, we feel that it is not possible to holdthat the impugned levy imposes an unreasonable restriction on thefreedom of the petitioners to carry on business. The considerationssimilar to those which weighed with this Court in upholding the

10 (1983) 3 SCC 237

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Mustard Oil Price Control Order, 1977 in Prag Ice & OilMills v. Union of India [(1978) 3 SCC 459 : AIR 1978 SC 1296 :(1978) 3 SCR 293 :1978 Cri LJ 1281] ought to be applied in thiscase also. Though patent injustice to the operators of stagecarriages in fixing lower returns on the tickets issued to passengersshould not be encouraged, a reasonable return on investment or areasonable rate of profit cannot be the sine qua non of the validityof the order of the Government fixing the maximum fares whichthe operators may collect from their passengers. It cannot also besaid that merely because a business becomes uneconomical as aconsequence of a new levy, the new levy would amount to anunreasonable restriction on the fundamental right to carry on thesaid business. It is, however, open to the State Government tomake any modifications in the fares if it feels that there is a need todo so. But the impugned levy cannot be struck down on the groundthat the operation of stage carriages has become uneconomicalafter the introduction of the impugned levy. Moreover the materialplaced by the petitioners is not also sufficient to decide whether thebusiness has really become uneconomical or not. We do not,therefore, find any merit in this ground also.”

A business or a trade may become unprofitable or unviable on

account of various factors such as the advent of technology, change in

consumer preferences, entrance of new competitors, a policy shift of the

Government aimed at subserving larger public interest or security of

revenue. But in the end, these are mere vagaries of trade which cannot be

recognised as constituting the infringement of a fundamental right to

carry on that trade or business. While hearing submissions advanced on

behalf of the petitioners, it was more than evident that what the

petitioners essentially seek to achieve is a perpetuation of the system of

physical stamping and the continuation of a business model which is

perceived to be threatened by the advent of e stamping. Articles 19, 21 or

38 of the Constitution cannot possibly be invoked for the aforesaid

purpose.

The Court lastly deems it apposite to advert to the following data

which is available on the official website of the Stamp and Registration

Department of the Government of U.P.11 According to the data uploaded

on the website, 3097 ACC’s have already been appointed and are

functioning in the State. This should conclusively lay at rest the

11 https://igrsup.gov.in/prernadoc/vender_list.pdf

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contention of the petitioner that the trade of e stamps is uneconomical or

unfeasible.

In a slightly different factual backdrop but not insignificant for our

purpose, the Supreme Court while dealing with the issue of entrance of

new competitors and their impact on existing businesses in Mithilesh

Garg Vs. Union of India 12 observed: -

9. Article 19(1)(g) of the Constitution of India guarantees to allcitizens the right to practice any profession, or to carry on anyoccupation, trade or business subject to reasonable restrictionsimposed by the State under Article 19(6) of the Constitution ofIndia. A Constitution Bench of this Court in Saghir Ahmad v. Stateof U.P. [(1955) 1 SCR 707 : AIR 1954 SC 728] held that thefundamental right under Article 19(1)(g) entitles any member ofthe public to carry on the business of transporting passengers withthe aid of vehicles. Mukherjea, J. speaking for the Court observedas under: (SCR p. 708)

“Within the limits imposed by State regulations any member ofthe public can ply motor vehicles on a public road. To that extenthe can also carry on the business of transporting passengers withthe aid of vehicles. It is to this carrying on of the trade or businessthat the guarantee in Article 19(1)( g ) is attracted and a citizen canlegitimately complain if any legislation takes away or curtails thatright any more than is permissible under clause (6) of that article.”

It is thus a guaranteed right of every citizen whether rich or poor totake up and carry on, if he so wishes, the motor transport business.It is only the State which can impose reasonable restrictions withinthe ambit of Article 19(6) of the Constitution of India. Sections47(3) and 57 of the old Act were some of the restrictions whichwere imposed by the State on the enjoyment of the right underArticle 19(1)( g ) so far as the motor transport business wasconcerned. The said restrictions have been taken away and theprovisions of Sections 47(3) and 57 of the old Act have beenrepealed from the statute book. The Act provides liberal policy forthe grant of permits to those who intend to enter the motortransport business. The provisions of the Act are in conformitywith Article 19(1)( g ) of the Constitution of India. The petitionersare asking this Court to do what the Parliament has undone. Whenthe State has chosen not to impose any restriction under Article19(6) of the Constitution of India in respect of motor transportbusiness and has left the citizens to enjoy their right under Article19(1)( g ) there can be no cause for complaint by the petitioners.

10. On an earlier occasion this Court dealt with somewhat similarsituation. The Uttar Pradesh Government amended the old Act bythe Motor Vehicle (U.P. Amendment) Act, 1972 and insertedSection 43-A. The new Section 43-A apart from making certainchanges in Section 47 of the old Act also omitted sub-section (3) of

12 (1992) 1 SCC 168

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Section 47 of the old Act. Section 43-A provided that in the case ofnon-nationalised routes, if the State Government was of theopinion that it was in the public interest to grant permits to alleligible applicants it might, by notification in the official gazetteissue a direction accordingly. The necessary notification wasissued with the result that the transport authorities were to proceedto grant permits as if sub-section (3) of Section 47 was omitted andthere was no limit for the grant of permits on any specified routewithin the region. Section 43-A and the consequent notificationwas challenged by the existing operators before the AllahabadHigh Court. The High Court dismissed the writ petitions. Onappeal this Court in Hans Raj Kehar v. State of U.P. [(1975) 1 SCC40 : (1975) 2 SCR 916 : AIR 1975 SC 389] dismissed the appeal.Khanna, J. speaking for the Court held as under: (SCC pp. 44-45,paras 6 and 8)

“The contention that the impugned notification is violative of therights of the appellants under Article 19(1)(f) or (g) of theConstitution is equally devoid of force. There is nothing in thenotification which prevents the appellants from acquiring, holdingand disposing of their property or prevents them from practisingany profession or from carrying on any occupation, trade orbusiness. The fact that some others have also been enabled toobtain permits for running buses cannot constitute a violation ofthe appellants' rights under the above two clauses of Article 19 ofthe Constitution. The above provisions are not intended to grant akind of monopoly to a few bus operators to the exclusion of othereligible persons. No right is guaranteed to any private party byArticle 19 of the Constitution of carrying on trade and businesswithout competition from other eligible persons. Clause ( g ) ofArticle 19(1) gives a right to all citizens subject to Article 19(6) topractise any profession or to carry on any occupation, trade orbusiness. It is an enabling provision and does not confer a right onthose already practising a profession or carrying on anyoccupation, trade or business to exclude and debar fresh eligibleentrants from practising that profession or from carrying on thatoccupation, trade or business. The said provision is not intended tomake any profession, business or trade the exclusive preserve of afew persons. We, therefore, find no valid basis for holding that theimpugned provisions are violative of Article 19.”

The identical situation has been created by Sections 71, 72 and 80of the Act by omitting the provisions of Section 47(3) of the oldAct. It has been made easier for any person to obtain a stagecarriage permit under the Act. The attack of the petitioner onSection 80 on the ground of Article 19 has squarely been answeredby this Court in Hans Raj Kehar case [(1975) 1 SCC 40 : (1975) 2SCR 916 : AIR 1975 SC 389] .”

Upon noticing the content and extent of the right that can be

claimed under or recognised to flow from Article 19, it is manifest that

the petitioner cannot possibly assert or place an obligation upon the

appropriate government to frame a business model which may necessarily

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guarantee a return or a profit in a particular trade or business. Ultimately

it is for the individual to ascertain and assess whether it would be

profitable for him to engage in that business or pursuit. Any existing trade

would be susceptible to change or disruption in the business environment.

In fact disruption is a specter which always exists as technological

advances are made and new and more efficient processes evolve. The

Constitution holds forth no guarantees against such fluctuations. Regard

must also be had to the fact that the system of e stamping as introduced

does not compel the petitioner to engage in the trade of e stamp if it be

perceived to be unviable by them. The inevitable reach and adoption of

the system of e stamping also cannot be stalled only with a view to

perpetuate the sale of physical stamps.

K. ARTICLE 19 (6) AND THE REASONABLE

RESTRICTION

A brief discussion on the concept of a reasonable restriction that

may be imposed under Article 19(6) is necessitated in light of the

submission that the impugned measures are also violative of Articles 21

and 38 of the Constitution and that they deprive the petitioners of a right

to livelihood. That the right to eke out a livelihood is an integral part of

the right to life is indisputable. The question here is whether the petitioner

and its constituents are in fact being deprived of that right. The second

question is whether the right of the petitioners to practice or carry on a

trade or business has been arbitrarily restricted. Undisputedly, the rights

conferred by Article 19 of the Constitution are neither absolute nor

unfettered. They are entitled to be exercised subject to just restrictions

that may be imposed by the Government “in the interest of general

public”. The validity of such a restriction as and when imposed and

assailed is liable to be tested on the anvil of reasonableness with the

Courts striving to strike a balance between the freedom that is guaranteed

and the larger public interest that the restriction seeks to subserve. While

adjudging the validity of a restriction so enforced, the Court must

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evaluate its reasonableness not standing in the shoes of the person upon

whom that restriction operates but from the viewpoint of the community

as a whole. In all such situations the question to be posed would be

whether the restriction has come to be imposed to preserve and protect the

larger interests of the community, its social and economic welfare, public

order or health.

Explaining the interplay between Article 19(1)(g) and the scope of

Article 19(6) of the Constitution, the Supreme Court in Krishnan

Kakkanth had observed as follows:-

“26. After giving our careful consideration to the facts andcircumstances of the case and submissions made by the learnedcounsel for the parties, it appears to us that the fundamental rightfor trading activities of the dealers in pumpsets in the State ofKerala as guaranteed under Article 19(1)(g) of the Constitution hasnot been infringed by the impugned circular. Fundamental rightsguaranteed under Article 19 of the Constitution are not absolute butthe same are subject to reasonable restrictions to be imposedagainst enjoyment of such rights. Such reasonable restriction seeksto strike a balance between the freedom guaranteed by any of theclauses under Article 19(1) and the social control permitted byclauses (2) to (6) under Article 19.

27. The reasonableness of restriction is to be determined in anobjective manner and from the standpoint of the interests ofgeneral public and not from the standpoint of the interests of thepersons upon whom the restrictions are imposed or upon abstractconsideration. A restriction cannot be said to be unreasonablemerely because in a given case, it operates harshly and even if thepersons affected be petty traders (Mohd. Hanif v. State ofBihar [AIR 1958 SC 731] ). In determining the infringement of theright guaranteed under Article 19(1), the nature of right alleged tohave been infringed, the underlying purpose of the restrictionimposed, the extent and urgency of the evil sought to be remediedthereby, the disproportion of the imposition, the prevailingconditions at the time, enter into judicial verdict (LaxmiKhandsari v. State of U.P. [(1981) 2 SCC 600 : AIR 1981 SC873] ; D.K. Trivedi and Sons v. State of Gujarat [1986 Supp SCC20] and Harakchand Ratanchand Banthia v. Union of India [(1969)2 SCC 166 : AIR 1970 SC 1453] ).”

More recently in Karnataka Live Band Restaurants Assn.

Vs. State of Karnataka 13 the Supreme Court held: -

46. As and when the question arises as to whether a particularrestriction imposed by law under clause (6) of Article 19 is

13 (2018) 4 SCC 372

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reasonable or not, such question is left for the court to decide. Thetest of reasonableness is required to be viewed in the context of theissues, which faced the impugned legislature. In construction ofsuch laws and while judging their validity, the court has toapproach the issue from the point of furthering the social interest,moral and material progress of the community as a whole.Likewise, while examining such question, the Court cannotproceed on a general notion of what is reasonable in its abstractform nor can the court proceed to decide such question from thepoint of view of the person on whom such restriction is imposed.What is, therefore, required to be decided in such case is whetherthe restrictions imposed are reasonable in the interest of generalpublic or not.

47. This Court has laid down the test of reasonableness in State ofMadras v. V.G. Row [State of Madras v. V.G. Row, AIR 1952 SC196 : 1952 Cri LJ 966] and very succinctly said that it is important,in this context, to bear in mind that the test of reasonableness,wherever prescribed, should be applied to each individual statuteimpugned and no abstract standard or general pattern ofreasonableness can be laid down as applicable to all cases. Thenature of the right alleged to have been infringed, the underlyingpurpose of the restrictions imposed, the extent and urgency of theevil sought to be remedied thereby, the disproportion of theimposition, the prevailing conditions at the time, should all enterinto the judicial mind.

48. This Court has further ruled that the expression “in the interestof general public” occurring in clause (6) of Article 19 is anexpression of wide import which comprehends in it public order,public health, public security, morals, economic welfare of thecommunity, and lastly, objects mentioned in Part IV of theConstitution. (See Municipal Corpn., Ahmedabad v. JanMohammed Usmanbhai [Municipal Corpn., Ahmedabad v. JanMohammed Usmanbhai, (1986) 3 SCC 20] and DeepakTheatre v. State of Punjab [Deepak Theatre v. State of Punjab,1992 Supp (1) SCC 684].”

At the outset it may be noted that the petitioner and its members

have not been deprived of the right to engage in the trade of physical

stamp paper. The Court has also not been shown any decision of the State

Government expressly barring or discontinuing the sale and distribution

of physical stamp paper. The agreement proposed by SHCIL and the 2013

Rules additionally empower the petitioner to engage in the sale and

distribution of e stamps. The argument of a system of livelihood being

totally effaced is thus without substance. The petitioners have also failed

to establish that the business of distribution of e stamp is wholly unviable

or unprofitable. The arguments addressed on this score, as was noted

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hereinabove, were wholly conjectural and based on assumptions which

were not backed by any reliable material or data. In any case the

functioning of more than 3000 ACC’s in the State is stark testimony of

this contention being bereft of substance. It is equally important to note

that the 2013 Rules themselves require the CRA to enter into an

agreement with ACC’s who would be paid a commission on mutually

acceptable terms. The Court also bears in mind the submission of Sri

Shailendra that the rate of commission which is fixed is not sacrosanct

and that it is open to parties to arrive at a mutually agreeable rate of

commission. The agreement also puts in place a dispute redressal

mechanism which would clearly take care of situations where a dispute as

to the rate of commission arises. In any case the rate of commission

which is presently proposed has not been established on the strength of

cogent material to be wholly uneconomical or bound to cause a loss.

While the petitioner may perceive the arrangement proposed by SHCIL to

be unviable, that cannot possibly constitute an infringement of a right to

carry on trade or business.

In order to place in the balance the rights of the constituents of the

petitioner and the introduction of the system of e stamping and in order to

evaluate the soundness of the challenge that is raised, it would be apposite

to go back in time and briefly recapitulate the events which led to the

Union and the States adopting this methodology. The historical backdrop

in which e stamping came to be adopted, the reasons which constrained

the Government to adopt this secure system of stamping have been duly

noted in the communication of the Department of Economic Affairs,

Ministry of Finance of the Union Government dated 28 December 2005

extracted hereinbefore.

The unique security features which inform the system of e

stamping were noticed by the Division Bench of the Gujarat High Court

in Manish Jitendrakumar Shah as under: -

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The security features of e-stamping certificate are as under:

[1] The contents of e-stamp certificate can be verified from thewebsite, www.shcileststamp.com, from anywhere. Also contentscan be verified from the Mobile Application: “Estamping”(Android & IOS).

[2] System Generated Certificate: E-stamping certificateis generated on live web. The necessary data like name of theparties, stamp duty payer, amount of stamp duty along with dateand time of the e-stamping certificate are generated.

[3] Unique Certificate number: - Unique e-stampcertificate number is generated for each e-stamp. This is systemgenerated and not in serial order wise.

[4] 2D Bar Code: - All the data in the e-stamping certificate,is encrypted in 2D Barcode, which is on all e-stamp certificates.The data is in encrypted form and can be read by e-stampingmobile application or 2D Barcode reader.

[5] Micro Printing: - e-stamping certificate has microprinting text at 1400 dpi, which bears e- stamping certificatenumber and anti copy text images. This can be verified through16X and above magnifying glass.

[6] Optical Water Mark: - E-stamping Security paper hasoptical water mark image with Asoka image. While takingzerox/copy of the certificate, the pattern of the water mark willchange.

[7] The e-Stamping Security Certificate containssecurity features like coloured background with Lacey GeometricFlexible patterns and Subtle Logo images, Complex Ornamentaldesign borders, Anti – Copy text, micro printing artificialwatermarks and Overt and Covert features. Some of the featuresare visible under UV lights and when put against UV light, theimage of “Mahatma Gandhi”, with some fiber threads and someimages can be seen.

[8] A photocopy of the certificate of stamp duty was alsoplaced on record to demonstrate that if the e-stamping certificate isphotocopied, irrespective of the level of sophistication of thephotocopying machine, an Anti-copy Text will emerge at therelevant place, where the word “VOID” will be reflected.

As is manifest from the above, it was the imperatives of the need to

evolve a secure system for collection of tax in the shape of stamp duty

and the loopholes that were discovered in the light of the Stamp Scam

that led to the evolution of this system of payment of stamp duty. The

benefits attendant to a system of secure collection of tax subserves public

interest from the point of view of both the depositor of the tax as well as

the general public as a whole with tax being collected through a safe and

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secure system. The adoption of technology in this respect will

undisputedly extend innumerable benefits to the larger public interest.

The policy initiative so taken by the Government cannot possibly be

viewed as placing an unreasonable restriction upon the petitioner to

engage in the trade of stamps, physical or in e form.

L. IMPUGNED COMMUNICATION OF 17

JANUARY 2020

It becomes pertinent to note that the communication of 17 January

2020 which is impugned does not impose a bar on the sale or distribution

of physical stamps. It also does not embody a decision of the Government

to do away with the system of physical stamps being used in respect of

instruments that may come to be executed for all times to come. All that it

states is that till further orders, no fresh indents or demands for

procurement of physical stamps be forwarded. Kesarwani J. in his opinion

has noted the statement made on behalf of the State that physical stamps

of more than Rs. 17,000 crores were in stock with the Government and as

per prevailing rate of consumption shall take more than two years to

exhaust. This statement would also explain the decision as embodied in

the communication of 17 January 2020. The Court further notes that there

is no allegation in the writ petition nor was any oral submission advanced

that the petitioner or its constituents have been denied physical stamps or

that their demands for supply of physical stamps have not been honoured.

While Sri Rajvanshi in the course of his oral submissions did contend that

physical stamps are no longer available in the State, in the absence of any

material on the record in support of the aforesaid, the Court finds no

justification to take note of the same.

M. UNCONSCIONABLE CONTRACT AND

BARGAINING POWER OF PARTIES

The basic legal principles infusing the concept of public functions,

of contracts offered by the State and its instrumentalities being judged on

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the plinth of public law and the applicability of Sections 23 and 29 of the

Indian Contract Act to such contracts as eloquently expounded by Bhanot

J. is clearly unexceptionable. However, with due respect to the view so

taken by the learned Judge, this Court is of the considered view that the

aforesaid questions did not arise or fall for consideration at all. The

petitioner nowhere assailed the proposed contract or the action of the

State on the aforesaid lines. A detailed examination of the writ petition

and the various averments made therein would clearly bear this out. In the

absence of even a rudimentary platform having been laid in the writ

petition in this regard, no occasion arises for the Court to suo moto

examine or adjudge the action of the respondents from that perspective.

N. DIRECTIONS FOR DISCLOSURE

The petitioner has abjectly failed to make out a case for the

respondents being commanded to make disclosures regarding the actual

commission being earned by SHCIL. It becomes pertinent to note that in

terms of Rule 10 of the 2013 Rules, the commission which the

Government would pay to the CRA is to be duly published in the Gazette.

It was always open to the petitioner if it assumed SHCIL to be a public

authority to seek such information in accordance with law. It is in this

respect that this Court in the introductory part of this opinion had spelt

out when and which situations could the constitutional court exercising

powers under Article 226 of the Constitution assume an inquisitorial role.

In any case the relief as couched in this respect itself establishes that the

case of the petitioner of the trade and business of physical stamp being

rendered unviable or loss-making rests solely on surmise and conjecture.

This since evidently, they themselves are not in possession of requisite

facts or convincing data which may even prima facie sustain their

assertion of their trade being rendered unprofitable.

O. TO PRESERVE THE SYSTEM OF PHYSICAL

STAMPING

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The Court has in the preceding parts of this opinion already noticed

the factual backdrop surrounding the advent and evolution of the e

stamping regime. The introduction of this system rests on sound, germane

and weighty reasons such as avoidance of fraud and forgery of stamp

paper, securing collection of State revenue and a host of other factors

which were taken into consideration. E stamping in essence represents a

policy initiative formulated by the State. The aforesaid policy decision

has neither been assailed nor has it been established to be arbitrary.

Ultimately it is for the State to take a principled decision and formulate its

policy with respect to the quantity and value of physical stamp paper that

may be permitted to circulate and to determine how much of the total

demand of stamp paper is to be in the physical or e stamp form. This

Court would be treading down perhaps an impermissible or at least

uncertain path if it were to either arrogate to itself this power or decide

this issue by way of a judicial fiat and that too in respect of an issue

which clearly falls in the realm of policy. This Court concurs with the

views expressed by Kesarwani J. on this score.

P. SUMMATION

Upon an overall consideration of the aforesaid discussion this

Court is of the considered view that the petitioner has abjectly failed to

lay even a rudimentary platform for the writ petition being retained on the

board of the Court and the respondents being called upon to file a return

in the proceedings. The petitioner has failed to establish the existence of

an unfettered or indefeasible right to trade in stamp paper. That right rests

solely upon the grant of a license under the provisions of the 1942 Rules.

The right to engage in that trade would thus stand governed by the

provisions contained in the license. The right to trade in stamp paper has

also not been found to be a one which existed in common law and thus

one entitled to be pursued without any fetter or restraint.

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The right to trade in e stamps is evidently governed by the 2013

Rules. Neither the validity of these Rules nor the policy initiative of the

Government in this regard was either questioned or assailed. The

proposed contract was also not established to be ultra vires the aforesaid

Rules. The submission of the proposed contract being unprofitable was

wholly conjectural with the petitioner failing to establish even prima facie

that the business would be unviable. In any case if the petitioner does

perceive that business to be unprofitable, it is open to its members not to

pursue the same. Article 19 of the Constitution cannot be invoked to

require the Court to rework the terms of the contract which is proposed or

compel a party to guarantee a particular rate of profit or return.

The submission with regard to Articles 21 and 38 is found to be

bereft of substance since the Court has not been shown any decision of

the State to discontinue the use of physical stamp altogether. The

petitioner has also not brought forth any convincing material which may

establish a shortage of physical stamp in the State or that any particular

indent so placed by a licensed vendor was not honored.

It would be wholly inappropriate for the Court to frame any

direction commanding the State to continue the system of physical

stamping in perpetuity. That would clearly amount to treading in the field

of policy, a province reserved for the Executive. It is ultimately for the

appropriate Government to consider what quantity of physical stamps

should be permitted to be in circulation. These are clearly not issues

which this Court can either rule on or dictate while exercising its powers

of judicial review.

Q. CONCLUSION

In light of the aforesaid discussion and the conclusions recorded, I

would dismiss the writ petition.

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The papers may now be placed before the appropriate Division

Bench for disposal of the writ petition in accordance with the Rules of the

Court.

Order Date :- 08.4.2021Vivek Kr.

(Yashwant Varma, J.)

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